CyrusOne and CoreSite Acquisitions: $25B Data Center Deals

Recent Consolidation Activity in the U.S. Data Center Industry

The past week has witnessed significant consolidation within the U.S. data center sector. CyrusOne and CoreSite, two prominent companies, have each been the subject of acquisition announcements, with deals totaling $15 billion and $10 billion respectively.

It’s noteworthy that these substantial acquisition announcements occurred on the same day, an uncommon event within the industry.

CyrusOne Acquisition Details

The larger of the two transactions involves CyrusOne. KKR, a globally recognized private equity firm, and Global Infrastructure Partners, an investor specializing in infrastructure assets including data centers, have agreed to acquire CyrusOne at a 25% premium.

This premium is calculated based on the company’s closing stock price of $72.57 per share as of September 27th.

The CyrusOne board has already given its approval to the deal. Completion of the acquisition is anticipated in the second quarter of the following year, subject to regulatory clearances.

According to data from Synergy Research Group, which monitors the cloud and data center landscape, this represents the largest data center acquisition to date.

It surpasses Blackstone’s earlier acquisition of QTS for $10 billion, completed earlier in the year.

CoreSite Acquisition Details

Simultaneously, CoreSite announced its acquisition by American Tower, a real estate investment trust (REIT), in a deal valued at $10 billion.

CoreSite currently operates 25 data centers, provides 21 cloud on-ramps, and facilitates over 32,000 interconnections across eight key U.S. markets.

The company reports an annual revenue of $655 million.

Industry Position and Growth Drivers

While these companies may not be widely recognized by the general public, Synergy Research Group identifies them as the third and fourth largest U.S. data center providers.

This ranking is based on both colocation services – the number of businesses utilizing their facilities – and overall revenue.

Both CyrusOne and CoreSite maintain a significant footprint within the U.S. market.

John Dinsdale, a principal analyst at Synergy, emphasizes that the sustained expansion of these operations is fueling the demand for increased capital investment.

“The scale of investment needed in the data center sector is exceeding the capacity of even the largest operators,” Dinsdale stated.

“This is leading to a greater influx of capital from external investors.”

He further noted that ownership of four of the top six U.S. data center operators has changed hands in recent times.

Additionally, the two industry leaders, Equinix and Digital Realty, are increasingly employing joint ventures to finance their continued growth.